France still remains the largest market for Champagne in Europe, but sales there have barely expanded since 1998, according to a new report from market analysts Mintel . Sales there were 125 million litres in 2003, the same amount as five years earlier, while value sales of €3.5 billion were in fact slightly below pre-Millennium levels.
According to Mintel, attempts to rejuvenate the image of Champagne in the French market by targeting trendy bars and nightclubs have not been particularly successful. Instead, it seems, producers have resigned themselves to only minimal growth in the domestic market and have turned to overseas markets to generate growth.
In Europe, the UK is the biggest market for Champagne, with some 26 million litres sold there in 2003, a 51 per cent increase since 1998. While this figure is still well behind that of France, Mintel's report shows that the British market is clearly more dynamic than its cross-Channel neighbour - value sales were up 10 per cent year-on-year in 2003 at €1.3 billion, a 50 per cent increase on the 1998 figures.
"It is often said, that the state of the economy can be judged by the performance of the Champagne market. If this is true, then the UK is clearly booming," said Michelle Strutton, senior consumer analyst at Mintel.
"The UK Champagne market is at an all time high with consumption now much higher than it was over the Millennium period. Growth is being backed by a strong economic setting and increasing consumer affluence. The growing popularity of style bars in the capital and other metropolitan areas, favoured by affluent, young professionals, has also helped boost sales," she added.
But the UK is not the only market in Europe offering hope for French producers. Spain has also had a particularly dynamic Champagne market, with sales there also rising 50 per cent since 1998 in volume terms to 1.6 million litres. Admittedly, the market remains small - 40 times smaller than the UK, for example - but value growth has nonetheless been impressive, rising 70 per cent since 1998 to more than €31 million.
Italy, too, was a growth market, albeit at rather more modest levels: sales of Champagne reached nearly €206 million in 2003, leaving value growth for the 1993-2003 period at 22 per cent. In volume terms, the market stood at 6.4 million litres in 2003, up by 7 per cent on 2002.
But Germany paints a rather more depressing figure, with sales there dropping by 30 per cent since 1998, although in absolute terms the market remains one of the biggest at €516 million last year. But there is little hope of any recovery in the immediate future - in fact, the rot set in well before the Millennium celebrations in 1999, when Germany was one of very few countries not to experience a peak in sales.
"The continuing uncertain economic climate and the declining consumption of alcohol in general are a hindrance to any real growth," said Strutton. "What is more the Germans are not particularly enthusiastic consumers of Champagne, partly because of the popularity of Sekt, their locally-produced sparkling wine."
But despite the bright spots in the UK and Spain, times remain tough for France's Champagne suppliers, who have struggled to lift sales back to the pre-Millennium levels. Although sales did increase marginally on the previous year in 2003, the general outlook for Champagne remains bleak, according to Mintel, especially with a deteroriation of the product's image in its home market, still the most important in Europe.
"Unlike other countries in Europe, Champagne is no longer considered a luxury product in France. It is drunk by a broad cross-section of consumers on a variety of occasions, and has recently become popular as an aperitif," Strutton said.
This devaluing of the drink's image has also been compounded by the growing importance of discount retailers in France, whose low-cost own label Champagnes have gone a long way towards demystifying the sparkling wine.
The French in fact drink over two litres of Champagne each a year, reflecting its increasingly regular consumption - and an increasing lack of prestige. In contrast, just 28 per cent of adults in the UK drink Champagne, reflecting its continued luxury status.
This increasing 'commoditisation' of Champagne in its home market does not bode well for the future, according to Mintel. Indeed, the analysts estimate that by 2007 the size of the French Champagne market will have shrunk to just 120 million litres, and will be worth €3.26 billion, a decline of around 8 per cent since 2003.
The Champagne market in the UK, on the other hand, looks set to experience a very different future, with volume sales expected to rise to almost 40 million litres by 2007, an increase of some 44 per cent. In value terms the market will grow by a further 36 per cent, to be worth €1.8 billion by 2007.
"The prospects for the market are good, given its current buoyancy and the optimistic economic outlook in the UK. Champagne is still seen very much as a drink for special occasions but to grow the market the industry needs to perform a delicate balancing act. Champagne needs to be 'democratised' without shedding its long-standing and carefully cultivated image as the finest sparkling wine in the world," said Strutton.